Net Neutrality: a Perspective Responding to Recent European Union Developments
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Net Neutrality: A perspective responding to recent European Union developments David Rogerson, Pedro Seixas and Jim Holmes December 2016 WWW.INCYTECONSULTING.COM Net Neutrality: A Perspective responding to recent EU developments Table of Contents Abstract .............................................................................................................................................................. 3 Authors ............................................................................................................................................................... 4 1 Introduction .............................................................................................................................................. 5 1.1 What is net neutrality? ........................................................................................... 5 1.2 Why is net neutrality controversial? ........................................................................ 8 1.3 How has net neutrality been implemented? ............................................................. 9 1.4 Why net neutrality has become more important ..................................................... 10 1.5 Is there a need to regulate net neutrality? ............................................................. 11 1.6 Structure of this Paper ......................................................................................... 13 2. The new EU Regulatory framework .................................................................................................. 14 2.1 The history of net neutrality in the EU ..................................................................... 14 2.2 The EU Regulation of November 2015 ................................................................... 16 2.3 Traffic management as part of reasonable network management ............................ 16 2.4 Service differentiation – quality and price .............................................................. 18 2.5 The BEREC Guidelines of August 2016 .................................................................. 18 2.6 Traffic management ............................................................................................ 19 2.7 Service differentiation – quality and price .............................................................. 20 2.8 What happens next? ............................................................................................ 22 3. What is happening outside of Europe ............................................................................................... 24 3.1 Introduction ........................................................................................................ 24 3.2 USA ................................................................................................................... 25 3.3 Canada .............................................................................................................. 26 3.4 Chile .................................................................................................................. 28 3.5 Brazil ................................................................................................................. 29 3.6 India .................................................................................................................. 31 3.7 Australia ............................................................................................................. 33 3.8 South Korea ........................................................................................................ 34 4. Overall assessment .................................................................................................................................. 36 References ....................................................................................................................................................... 40 © Incyte Consulting 2016 2 Net Neutrality: A Perspective responding to recent EU developments ABSTRACT The road to net neutrality within the European Union (EU) has been slow and winding. However, a major milestone was reached in August 2016 through the publication of the BEREC Guidelines on the Implementation by National Regulators of European Net Neutrality Rules. This paper explores the scope of the net neutrality principle as understood and applied in a number of jurisdictions. The approach in the EU is contrasted with the approaches of the Federal Communications Commission (FCC) in the United States (US) and of a number of other countries. Although there are some constants that recur for net neutrality in all of the countries examined, there remain a variety of specific local connotations. This paper argues that the BEREC Guidelines have effectively and significantly brought to an end the long lasting and highly polarised 'net neutrality' debate that began in the United States in the 1990s then subsequently spread with varying intensity to other parts of the world. The BEREC net neutrality guidelines potentially provide a comprehensive, flexible, readily implementable and globally exportable framework of solutions for balancing the legitimate 'net neutrality' needs — social, economic and regulatory, of all stakeholders regardless of national jurisdiction. As with the earlier EU ex-ante regulatory frameworks for market analysis and cost-based interconnection, the BEREC paper paves the way for continued export of best practice regulation from the EU to the rest of the world. However, there are issues that demand caution in how the BEREC approach might be implemented. © Incyte Consulting 2016 3 Net Neutrality: A Perspective responding to recent EU developments AUTHORS The authors have extensive experience as consultants and commentators on telecommunications industry and regulatory issues in many countries. David Rogerson and Jim Holmes are founding partners of Incyte Consulting, located in Falkirk (Scotland) and Melbourne, respectively. Pedro Seixas is a Principal Associate of Incyte Consulting located in Frankfurt. They may be contacted via the Incyte Consulting website: www.incyteconsulting.com © Incyte Consulting 2016 4 Net Neutrality: A Perspective responding to recent EU developments 1 INTRODUCTION 1.1 What is net neutrality? Net neutrality is a vague term, without a precise meaning. It holds different meanings for different stakeholders in academia, in consumer groups or in the value chain of providing Internet access services. The net neutrality discussion emerged in the United States (US) in the late 1990s because of concerns about potential harms to the end-to-end nature of the internet. The main concern was that the vertical integration of cable firms with internet service providers (ISPs) in the US could disrupt the end-to-end design1 principle of the internet. In the emerging debate, network neutrality (or net neutrality it is now commonly abbreviated) was a term introduced by Tim Wu in a 2003 article2 (Wu, 2003) as a requirement needed to safeguard evolutionary competition in the internet environment. What did Wu mean by network neutrality when he wrote his article? He said that net neutrality was probably best defined as a network design principle.3 The concept implies that in such a network all content sites and platforms are treated equally. Therefore, an internet service provider (ISP) operating in such a network should be required to treat all data from all content providers in the same way. If a net neutrality requirement would not exist, ISPs (and/or vertically integrated providers as mentioned above) could “throttle” certain content, slow down its delivery or, in an extreme case, even block it in order to give preferential treatment to its own traffic or to content originating from applications and/or content providers with whom the ISP could sign specific agreements. 1 End-to-end design here means that all end users can access all content available in the internet. Vertical integration between content owners and internet access providers could potentially lead to blocking of competing content or services and therefore disrupt this principle. 2 As mentioned in the article, the concern that the vertical integration of cable firms with ISPs would prove a threat to the end-to-end design of the internet was first highlighted by Mark Lemley and Lawrence Lessig. As discussed in Wu’s article several remedies could be thought to mitigate the potential harmful behaviour from ISPs. One of such remedies was allowing consumers their choice of ISPs, usually called an "open access remedy". Another was an anti-discrimination rule. The article argued that a discrimination rule was the best way to prevent harmful behaviour and as a means to keep a network neutral. 3 As Tim Wu wrote in his website (http://www.timwu.org/network_neutrality.html): “Network neutrality is best defined as a network design principle. The idea is that a maximally useful public information network aspires to treat all content, sites, and platforms equally. This allows the network to carry every form of information and support every kind of application. The principle suggests that information networks are often more valuable when they are less specialised – when they are a platform for multiple uses, present and future. (For people who know more about network design, what is just described is similar to the "end-to-end" design principle).” © Incyte Consulting 2016 5 Net Neutrality: A Perspective responding to recent EU developments There are many definitions of net neutrality